World Press View: Greece Has Almost No Hope Left Now

Exasperated creditors have essentially thrown up their hands at Greek intransigence and are ready to wash their hands of providing any chance of more hope, world press reports show.

Some excerpts:

Greece Creditors Grim On Deal Prospects

Wall Street Journal – Marcus Walker

Greece’s international creditors signaled they are losing hope that Athens will do what is needed to unlock bailout funds before it runs out of money, and Greek government bond prices plunged as concerns rose about default and an exit from the eurozone.

The European Union’s executive arm, which helps oversee Greece’s bailout, said it is “not satisfied” with the slow progress in talks, while Christine Lagarde, the managing director of the International Monetary Fund, another key lender,said Greece needs to “get on with the work” of fixing its economy.

Ms. Lagarde said Thursday she has warned Greece against postponing loan payments, a prospect people familiar with the matter said Athens informally explored.

Policy makers across the euro currency zone are bracing themselves for brinkmanship in coming weeks that could lead to a resolution—of one kind or another—but only in the face of further political and financial turmoil. “Greece is moving ever closer to the abyss,” Slovakia’s Finance Minister Peter Kazimir said this week.

With Germany’s powerful finance minister, Wolfgang Schäuble, warning that the impasse over Greece’s funding and economic strategy could drag into summer, yields on Greece’s bonds maturing in 2017 rose sharply on Thursday to more than 26%, signaling a very high risk of default. Investors said the sheer uncertainty surrounding Greece’s fate—including whether it will remain in the eurozone—is making it hard to price Greek debt at all.

“Liquidity is drying up in Greece,” Greek Finance Minister Yanis Varoufakis said Thursday in Washington. While expressing hopefulness that his government would conclude negotiations with its international creditors by the end of June, he said Athens is “not going to sign up to targets we know our economy cannot meet,” and would “compromise for a speedy agreement, but will not be compromised.”

Failure to reach agreement in coming weeks could lead to escalating financial and political turmoil in Greece, potentially taking the country to the imposition of capital controls and even to the brink of default.

Greek Creditors Try To Find Way To Stop Default

Bloomberg – Nikos Chrysoloras and Arne Delfs

Greece’s major creditors are not ready to let the country drop out of the euro as long as Prime Minister Alexis Tsipras shows willingness to meet at least some key demands, according to two people familiar with the discussions.

Chancellor Angela Merkel will go a long way to prevent a Greek exit from the single currency, though only so far, one of the people said. Every possibility is being considered in Berlin to pull Greece back from the brink and keep it in the 19-nation euro, the person said.

For all the foot-dragging in Athens, some creditors are willing to show Greece more flexibility in negotiations over its finances to prevent a euro exit, the second person said. The red line is that the Syriza-led government shows readiness to commit to at least some economic reform measures, said both people, who asked not to be named discussing strategy.

“Our view is that Greece is not going to exit the euro,” Stephen Macklow-Smith, head of European equity strategy at JPMorgan Asset Management in London, said in a Bloomberg Television interview on Friday. While both sides have “very entrenched positions” in the negotiations, “if you look at the way the euro-zone crisis has developed, in every case what you’ve seen is in return for firm action you get concessions.”

IMF’s Lagarde to Greece: Pay Us or Else

Forbes – Tim Worstall

It’s long been true that welshing on debts to the International Monetary fund is just something that a civilised country just doesn’t do. Thus there’s little surprise when Christine Lagarde, the head of the IMF , points out to Greece that there’s really no mileage in that country thinking about not paying the IMF back the money it’s owed. Because, you know, that’s just not something that civilised countries do.

There is however a sting in the tail here. For there’s no formal method of dunning a country that does fail to repay the IMF on time. It takes at least a month after the payment doesn’t appear for the IMF to go through it’s own internal reporting processes and then another couple of weeks for it to declare actual default.

And there’s politics in there as well: they can, quite happily, say that, well, they’re trying to pay, they’ve paid a bit perhaps, so we’ll not actually say that they are in default. The point being that the rules aren’t hard and fast. What really matters is what other people think of a skipped IMF payment and here it’s the European Central Bank that is most important.

Here’s Lagarde:

International Monetary Fund Managing Director Christine Lagarde warned that she wouldn’t let Greece skip a debt payment to the lender, shutting down a potential avenue to buy the Greek government some financial leeway.

“We never had an advanced economy actually asking for that kind of thing, delayed payment,” Lagarde said in an interview Thursday in Washington with Bloomberg Television. “And I very much hope that this is not the case with Greece. I would certainly, for myself, not support it.”

It’s almost ritualistic, her saying that of course. But that it has been said does bind in a way future actions. Having gone public with said statement then the IMF can’t really turn around and say “Well, it doesn’t matter” if Greece is late with a payment.